EUROPEAN COMMISSION
DIRECTORATE-GENERAL FOR ECONOMIC AND FINANCIAL AFFAIRS Economic Forecasts for the candidate countries, Spring 2002
Cyprus, Czech Republic, Hungary, Latvia, Lithuania, Malta, Poland, Romania Highlights
•As a result of the worsened international economic climate, economic growth
slowed down in the candidate countries at the end of 2001. Nevertheless, due to
strong domestic demand, most candidate countries showed resilience and the
extent of the slowdown remained limited, in line with our Autumn 2001 forecast.
•The weak economic development in the second half of 2001 weighs heavily on,
the average growth rate in the current year, despite the accelerating recovery.
An expected return to normal external and domestic developments should make it
possible to reach 4% average growth in 2003.
•Lower international commodity prices have contributed to an inflation
reduction in 2001. The expected further slowdown of average inflation over the
forecasting period is mainly the result of policy efforts to reduce inflation in
the highinflation countries Romania and Turkey.
•Continued enterprise restructuring and higher productivity growth resulted in
net employment losses and a higher unemployment rate in 2001. Over the
forecasting period, employment losses should be progressively compensated by
higher employment creation and should lead to a slightly improved overall labour
market situation in 2003.
•Despite weaker demand for exports and strong domestic demand, external
deficits declined slightly in 2001, due to more favourable terms of trade. The
acceleration of export demand in 2002 and 2003 should prevent a significant
deterioration of external balances, even with strong domestic demand.
•General government deficits remain relatively high as the combined result of
lower growth and counter-cyclical fiscal policies in some countries in the early
years, and high transition-related expenditures over the whole forecasting
period.
